Updated December 15, 2021
Defense Primer: Lowest Price Technically Acceptable Contracts
Background
given to higher levels of quality. Observers note that, in
When procuring goods or services, the Department of
circumstances where there is no appreciable benefit to DOD
Defense (DOD) generally seeks to obtain the best value for
for exceeding its stated minimum technical requirements,
the government by encouraging full and open competition,
the use of LPTA can potentially result in savings.
as required by the 1984 Competition in Contracting Act
Accelerated Time Frames
(P.L. 98-369, also known as CICA). Full and open
competition occurs when all eligible prospective contractors
In certain circumstances, LPTA may offer a more
are permitted to submit bids or proposals in response to a
streamlined and simplified approach to procuring certain
proposed contract action.
goods and services. Firms bidding for a contract know the
specific thresholds and can sometimes submit proposals
more quickly. Award decisions require little subjective
Best value, when used in the context of government
analysis, potentially accelerating decision-making.
procurement, refers to the expected outcome of an
acquisition that, in the government’s estimation, provides
Fewer Bid Protests
the greatest overall benefit in response to the requirement
Contracts awarded on the basis of lowest price are
(Federal Acquisition Regulation 2.101).
considered easier to defend against bid protests. In 2015,
then Under Secretary of Defense for Acquisition,
Getting the Best Value for DOD
Technology, and Logistics Frank Kendall acknowledged
this benefit, stating that “objective source-selection criteria
CICA generally mandates that, whenever practical, DOD
are harder to contest successfully.” However, he cautioned
must obtain full and open competition through the use of
that source-selection criteria and acquisition strategies
competitive contracting procedures. Part 15.101 of the
should not be designed around limiting the likelihood of bid
Federal Acquisition Regulation (FAR) establishes two
protests.
primary types of competitive source selection procedures
intended to obtain the best overall value for DOD: (1) the
When is LPTA Appropriate?
tradeoff process and (2) the lowest price technically
LPTA is considered best suited for situations in which
acceptable (LPTA) process. The tradeoff process is
generally used when cost is only one factor to be considered
contract requirements are well defined, simple, or reoccurring;
in awarding a contract. For example, DOD may award
there is a low risk for poor performance;
contracts based on non-cost factors such as quality and
there is little development work to be completed; and
performance; a firm’s technical or managerial expertise; or
there is no appreciable value to DOD for performance
past performance. Each of these criteria may be evaluated
exceeding the technical requirements.
on a sliding or pass/fail basis. The use of LPTA is
As such, LPTA is more likely to be effective when contract
appropriate when price is the determining factor in
requirements are clearly and comprehensively spelled out.
awarding a contract. Under LPTA, for all proposals deemed
Recent changes to statute and regulation have set forth
to be technically acceptable and therefore meeting DOD’s
specific requirements for the use of LPTA, as well as
specified minimum performance requirements, price is the
circumstances where DOD should generally avoid the use
determining factor in awarding a contract, with no
of LPTA. Section 813 of the FY2017 National Defense
consideration given to any other factors. Past performance
Authorization Act (NDAA) (as amended; see 10 U.S.C.
does not need to be an evaluation factor when it is not
§2305 note) mandates that DOD can only use LPTA if the
relevant for the particular acquisition.
following conditions are met:
In recent years, DOD has faced criticism for using LPTA
minimum contract requirements in terms of performance
instead of a tradeoff process in certain acquisitions.
objectives, measures, and standards are clearly identified;
Congress has expressed concern regarding the perceived
there is little or no value in exceeding the minimum technical
inappropriate use of LPTA and has passed legislation
or performance requirements set forth in the proposal request;
limiting DOD’s use of LPTA.
there is little or no subjective evaluation as to the desirability
of one proposal versus another;
Benefits to Using LPTA
there is a high degree of confidence that a review of technical
proposals other than the lowest bidder would not result in the
A number of analysts have identified specific benefits that
identification of factors that could provide value or benefit to
LPTA may provide DOD, including potential cost benefits,
DOD;
accelerated acquisition time frames, and fewer bid protests.
little or no additional innovation or future technological
Cost Benefits
advantage will be achieved by using a different source
selection process;
Under LPTA, all factors other than price are evaluated on
any goods being obtained are generally expendable in nature,
an acceptable or unacceptable basis without consideration
are nontechnical, or have a short life expectancy or shelf life;
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Defense Primer: Lowest Price Technically Acceptable Contracts
a justification is included for the use of an LPTA evaluation
has been “concerned that an overarching bias towards
methodology in the contract file; and
reducing prices paid by [DOD] to the exclusion of other
DOD has determined that the lowest price reflects full life-
factors could result in DOD buying low cost products that
cycle costs, including operations and support.
have the potential to negatively impact the safety of U.S.
military personnel.”
DOD is also required to avoid, to the maximum extent
practical, the use of LPTA for procurements predominantly
Recent Legislation
intended to acquire knowledge-based professional services
(such as cybersecurity services); personal protective
FY2017 NDAA (P.L. 114-328)
equipment; or knowledge-based training or logistics
Section 813: Required DOD to avoid using LPTA when
services in support of contingency operations or other
doing so would deny the benefits of cost and technical
operations outside of the United States. Other specific
tradeoffs in the source selection process and when
prohibitions on the use of LPTA have been enacted in
acquiring information technology services, personal
subsequent NDAAs.
protective equipment, and knowledge-based services.
Section 814: Prohibited DOD from using LPTA when
Case Study: Air Force Use of LPTA
procuring personal protective equipment, where the
In 2017, the Government Accountability Office (GAO)
level of quality or failure of the item could result in
reviewed a $21.5 mil ion Air Force contract for centralized
combat casualties.
mail sorting services in Germany. The Air Force stated that
Section 892: Prohibited DOD from using LPTA for
the LPTA source selection process was used as the
acquisition of audit services.
requirements for the service were well defined and
FY2018 NDAA (P.L. 115-91)
noncomplex. The risk and consequences of poor performance
were considered low, and there was no appreciable value for
Section 822: Specified that LPTA may only be used
performance exceeding the minimum stated requirements.
when there is no, or minimal prospect for future
technological advantage or for items that are
expendable, nontechnical, or expected to have short
DOD Use of LPTA
shelf lives.
In 2010, DOD introduced its Better Buying Power (BBP)
Section 832: Prohibited the use of LPTA for the
initiative, which was aimed at cutting acquisition costs by
engineering and manufacturing development of Major
$100 billion over a five-year period. Under this policy,
Defense Acquisition Programs. The Senate Armed
LPTA was viewed as a source selection procedure that
Services Committee report noted that, while DOD did
might help DOD reduce expenditures. In 2014, GAO found
not classify the source selection process used to acquire
that LPTA was highly attractive to DOD contracting and
the Northrop Grumman B-21 Raider as an LPTA
program officials due in part to declining budgets and
process, the acquisition procedure used resembled an
initiatives such as BBP. According to GAO, from FY2009
LPTA process, not a trade-off process. The committee
to FY2013, DOD’s use of LPTA for new, competitively
expressed concerns in part over the high degree of
awarded contracts grew from 26% to 36%. Similarly, a
expected development work.
Bloomberg analysis found that there was an appreciable
Additional Provisions: Prohibited the use of LPTA for
increase in DOD’s use of LPTA between 2008 and 2017.
selected software development programs (Section 874),
Observers have drawn attention to the perceived correlation
aviation critical safety items Section 882), and audit
between increased use of LTPA and budget constraints.
services (Section 1002).
Critics of DOD’s use of LPTA argue that by not providing
FY2019 NDAA (P.L. 115-232)
industry with a business incentive to offer better
Section 880: Prohibited government agencies from using
performance, there is no motivation for industry to develop
LPTA when doing so would deny the benefits of cost and
new, improved, or innovative products and services in
technical tradeoffs in the source selection process.
circumstances where DOD could benefit from better
Specifically, use of LPTA was prohibited when acquiring
contractor performance. The use of LPTA conditions the
personal protective equipment and certain knowledge based
government market to offer potentially less desirable goods
services (e.g., cybersecurity).
and services because the incentive structure encourages
firms to reduce their prices as long as their product remains
FY2020 NDAA (P.L. 116-92)
above the threshold of technical acceptability. Further,
Section 806: Required revision to the Federal Procurement
critics argue that LPTA contracts are not always the most
Data System (FPDS, or any successor system) to facilitate
effective and efficient approach to ensuring quality and
the collection of complete, timely, and reliable data on the
performance in the long term; these analysts argue that the
source selection process, to include tracking the usage of
use of LPTA may sacrifice long-term value for short-term
source selection mechanisms.
savings.
Heidi M. Peters, Analyst in U.S. Defense Acquisition
Recent Congressional Activity
Policy
Congress has also expressed concern regarding the misuse
of LPTA for source selection. As noted in the FY2016
IF10968
NDAA Conference Report (H.Rept. 114-270), Congress
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Defense Primer: Lowest Price Technically Acceptable Contracts
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https://crsreports.congress.gov | IF10968 · VERSION 9 · UPDATED